Financial Advisors come in all sorts of professions from Insurance agents, stock brokers, and bankers to lawyers, money managers, and CPAs. Most people are fairly familiar with what it is that most of these professionals do from day to day. If asked pretty much anyone off the street could tell you that an insurance agent sells insurance and that a stock broker sells stocks. Conversely, I get asked a lot what exactly a Wealth Manager’s job is from day to day.
A wealth manager is a different kind of financial advisor than those listed above. To delve into this let us first remove the lawyers and CPAs because, while they may give some financial advice, it is typically incidental to their work as a lawyer or CPA and doesn’t necessarily qualify as financial advice in the regulatory sense of the word. Bankers also do not qualify under the regulatory definition, but as banks are becoming more and more likely to offer financial services, and are buying up financial services firms, I think we should keep them in the realm of advisor. Also, understand that my list above is very short and there are many more professionals out there acting as financial advisors than what I listed above. So, with those qualifiers out of the way, what makes an insurance agent, stock broker, banker, and money manager different from a wealth manager?
First let’s look at what each given profession views as their respective performance measure. For the insurance agent they typically measure their success by how many new insurance policies they write. For the stock broker, how many trades did they make over a given period of time and how much commission. They may even look at the number of cold-called prospective clients they converted to actual clients. The banker? Well that’s easy – the amount of net deposits. And lastly, the money managers; their performance is based solely on the percentage return they bring to their clients. What then about the wealth manager? Wealth managers can only base their performance on whether their clients meet their life goals. Wealth managers help their clients reach those goals through a close relationship that involves more than anything the other mentioned professionals include. The difference here is that many financial advisors are product centric. The insurance agent sells insurance to clients – product centric. The stock broker sells stocks to his client – product centric. The banker sells accounts to customers – product centric. The money manager sells investment returns – product centric. The wealth manager sells knowledge to their clients. I’ve spent years becoming a Certified Financial PlannerTM practitioner, and years more getting a master’s degree in financial planning. I didn’t do that for my own benefit, I did it to help people with their financial matters so that they could reach their life goals. It’s all about being client centric as a wealth manager.
The short-short version is this: wealth managers are client-centered financial advisors.
If you are looking for a financial product then you can find that with any product-centered advisor, but if you want someone who will partner with you and become a trusted financial advisor to help you reach your life goals, then you need a wealth manager.